Wednesday, December 06, 2017

On Monday, the
Democratic Unionist Party effectively torpedoed a draft compromise between the
UK and the EU have “continued regulatory alignment [with] those
rules of the internal market and the customs union which, now or in the future,
support North South cooperation and the protection of the Good Friday Agreement”.

The next
day, Brexit Secretary David Davis made clear that the idea was actually to apply
regulatory alignment to the whole of the UK, not just to Northern Ireland. To
pre-empt criticism that this would mean that Britain becomes a “rule-taker”, he
specified that “alignment isn’t harmonisation. It isn’t having exactly the same
rules. It is sometimes having mutually recognised rules, mutually recognised
inspection – that is what we are aiming at.”

Many still expect there to be a deal ahead of, or at, the EU
Summit on 14 and 15 December. That would mean talks could move on to the all
important question of trade, and open up the possibility of a transitional deal
being concluded in January. So this crisette may be forgotten relatively
quickly.

Still, what
have we learned from a tumultuous few days?

Current talks on the Northern Irish border can
only be settled through an empty declaration because trade negotiations haven’t
been opened yet

It was
always nonsensical for the EU to count the Northern Irish border question as
one of the three issues that needed to be resolved in its first phase of
negotiations, which in theory would only deal with divorce and not with trade
issues. The reason there is the risk of a “hard border” after Brexit is
precisely because there may be a need for customs checks and restricted market
access to the EU for UK companies. Those are trade issues.

It was
expected that both sides declaring their determination to avoid a hard border
would be enough to move things on. That changed when the Irish government insisted
that the UK explain how it was going to avoid a hard border; the rest of the
EU27 had no choice but to back them up.

Precisely because
the EU refuses to discuss trade and all the details, it won’t be possible for
the UK to give such hard guarantees. So either Ireland – with the support of
the rest of the EU – can blow up the negotiations, risking a cliff-edge Brexit
that would badly harm the Irish economy and the peace process in Northern
Ireland, and leaving the EU27 to go “whistle” for their cash after all, or they agree a “a
fudge that gives all sides the leeway to move on to trade talks”, as The Timesdescribed the draft deal, which is now likely
to be altered a bit.Indeed, as the Sunday Times correspondent in Brussels
has put it: “The original demand of ‘no divergence’ for
NI - which would arguably mean staying within the EU system - morphed into ‘alignment’.
The latter can mean all things to all people. That's how the EU works, and
always narrowly avoids disasters.”

Interestingly,
Irish Taoiseach Leo Varadkar has said: “’regulatory convergence’ and ‘regulatory
alignment’ (...) mean the same in our view. We are happy to accept either.” So
if this would have been agreed, the UK and Ireland wouldn’t even agree on what
“alignment” means. If you want to talk about trade while refusing to talk about
trade, you’ll end up with an empty compromise.

The Irish government may be overplaying its hand

The Irish
government wants “firm guarantees on the lack of a hard border
in any circumstances" and “regulatory convergence”. That may be asking a
little bit too much. If interpreted strictly, it would mean that the UK would
need to remain a full rule-taker. And not just Northern Ireland, but, as Davis
has pointed out, the whole of the UK.

This
because an idea to decentralize power to let Northern Ireland decide to align
with EU regulation so to minimize border friction doesn’t seem to appeal to the Northern Irish Unionists. Not
our problem, the Irish may say? Well, think again. One hardly needs to be a
political mastermind to realize post-Brexit Britain won’t be content with a copy-and-paste
approach to all EU rules for the next few decades. The UK government is happy to do that during a transition period, but
only for a few years at the most, after which a Swiss-style or Canadian-style
arrangement would follow.

The same is
true for the Irish demand for Britain should stay in a customs union
with the EU, as this would avoid customs checks at the border. How sensible is
it for the Irish government to try to force the UK to outsource its trade
policy to Brussels? Again, Britain is prepared to do this for the transition period, if it is
be allowed to negotiate trade deals with third countries at the same time.
Asking for unsustainable solutions may well risk the cliff-edge the Irish rightly are fearful
of.

Ireland’s stubbornness on this issue
is particularly ill-advised when there are alternative technical solutions that
work for the EU-Swiss and EU-Norwegian customs borders and that according to both the Swiss customs chief and one of
Sweden’s most prominent customs experts could a good idea for Ireland.

Irish
academic Dan O'Brien put it well when he wrote: "[the Irish government] pushing too hard
has come with costs. These costs could multiply if the Government's hand is
overplayed."

Many British Remainers continue to propose
politically unrealistic solutions, demanding that the UK stays in the single
market and the customs union

It is
absolutely fair for British Remainers to advocate solutions that could help
soften Brexit. The only problem is that they are formulating unsustainable
solutions, like for example suggesting that the British Parliament would rubber
stamp all EU rules and regulations, without being able to vote on it. An EU
official already mocked David Davis’ lighter version of “alignment”,
telling the Guardian that that this
would mean that "the UK will not have any say on the decisions taken in
Brussels and will basically implement them without having any influence.”

Yet, that
and a more radical version of it is precisely what both London’s Mayor and the Scottish government have proposed, repeating their demands that the UK should stay in the single market and in the customs
union. Not only do they seem to confuse what the UK government has in mind with
regards to “regulatory alignment” (which means shadowing regulation in a
voluntary manner) with actual formal membership of the single market (which
means being obliged to automatically impose EU regulations). They truly should
stop presenting it as realistic that for the next few decades, Britain would
turn into a fax democracy and sit at the kids’ table of trade policy.

Just like
the Irish government, they should understand that “tout ce qui est excessif est insignifiant.” If they are genuinely
concerned about economic disruption due to Brexit, it’s time for them to come
up with solutions that fall within the remit of the politically conceivable.

The DUP matters and now the EU knows it

Did the
DUP’s intervention surprise Theresa May? Apparently, the party vetoed it during her lunch with Commission chief
Juncker. The Independent’s John
Rentoul describes the party as “world-class naysayers”,
while making the point that this episode really “strengthens Theresa May’s
position”, as it’s now very clear for the EU that she cannot just agree to anything.
The EU isn’t keen to face a new British Prime Minister, as this may well be a hardline
Brexiteer or someone who reopens some of the deals that the EU is keen on, for
example the one that plugs the “Brexit hole” in the EU budget. It’s hardly a
surprise that the DUP is using its political power. The EU and Ireland
basically invited them to the Brexit party when they insisted on talking about
the Northern Irish border before trade talks had begun.